From $5.172M, NMI Compact Impact share down to $1.93M

The CNMI will be getting only $1.93 million in Compact Impact funding for Fiscal Year 2010, a sharp drop from the FY 2009 funding of $5.172 million, under President Obama’s 2010 budget proposal of $3.4 trillion to the U.S. Congress.

This represents a Compact Impact funding drop of 62 percent or a loss of $3.242 million for the CNMI.

At the same time, the proposed Office of Insular Affairs funding for the CNMI’s capital improvement projects is only $10.995 million, a drop of $335,000 from the current level of $11.33 million.

The significant Compact Impact funding cut is due to a 41 percent drop in the number of Freely Associated States citizens who migrated to the CNMI, now at only 2,001 based on the U.S. Census Bureau’s latest survey.

This is the lowest annual Compact Impact funding the CNMI has ever had in decades. In FY 2008, the funding level was at $5.118 million.

Press secretary Charles P. Reyes Jr. said yesterday the Fitial administration is disappointed with the reduced amount of Compact Impact funding.

“The CNMI needs funding. …This presents further financial challenges to our government. The federal government raises minimum wage rates and imposes federalization, weakening our economy and causing an exodus of migrants and a reduction in Compact Impact funds,” Reyes told Saipan Tribune.

Acting Deputy Assistant Secretary for the U.S. Interior’s Office of Insular Affairs Nikolao Pula earlier said the significant drop is expected because of a steep drop in the CNMI’s FAS population. He said the economic slowdown forced FAS citizens to migrate to Guam or Hawaii where job opportunities abound.

Guam, which saw an 86 percent growth in FAS citizen population, from only about 10,000 in 2003 to 18,305 in 2008, will be receiving an additional $2.585 million in Compact Impact funding.

In FY 2010, Guam’s Compact Impact funding is proposed at $16.827 million, from only $14.242 million in FY 2009.

Survey figures suggest this could have been triggered by the intermigration of FAS citizens from the CNMI, which has seen an economic slowdown due to the demise of the garment industry and weak tourism.

Under a Compact between the United States and FAS, citizens of FAS are free to travel, work and study in the U.S. and its territories without U.S. visas.

The FAS includes Palau, the Marshall Islands and the Federated States of Micronesia (Yap, Chuuk, Pohnpei and Kosrae).

Guam, Hawaii, American Samoa and the CNMI share $30 million in Compact Impact funding that the Interior Department releases every year. The federal funding goes mainly to health, social service, public safety and education agencies for accommodating or providing services to FAS citizens.

Guam gets the lion’s share of the funding in FY 2010 at $16.827 million, followed by Hawaii with $11.229 million, and the CNMI at $1.930 million. American Samoa will be getting $14,000 in Compact Impact funding, a drop of $1,000 from the $14,000 budget in FY 2009.

The annual appropriation is reviewed every five years for possible realignment of allocations among recipient jurisdictions.

Rep. Ray N. Yumul, chair of the House Ways and Means Committee, and Sen. Maria “Frica” Pangelinan, chair of the Senate Fiscal Affairs Committee, jointly asked the Fitial administration on Thursday to clarify the projected Compact Impact funding in the FY 2010 budget.

Gov. Benigno R. Fitial said the administration expected Compact Impact funding to be “significantly reduced” and this will lower budget projections for FY 2010. He said Finance will work with the Legislature to reflect those changes in the budget.

The April 1 budget submission by the Department of Finance shows $5,171,916 in Compact Impact funding projection.